AT&T is buying Mexican wireless company Iusacell for $1.8 billion, or $2.5 billion with debt included. It adds to the growing talk of AT&T wanting to expand their service into Mexico.

Iusacell covers 70% of the Mexican population and currently has 8.6 million subscribers which is considerably less than AT&T’s 116.6 million subscribers.

“Mexico is still in the early stages of mobile Internet capabilities and adoption, but customer demand for it is growing rapidly. Iusacell gives us a unique opportunity to create the first-ever North American Mobile Service area covering over 400 million consumers and businesses in Mexico and the United States.” – AT&T CEO Randall Stephenson

Some are already claiming that this move could lead to plans that include free or reduced rates for Americans traveling in or calling to Mexico, or the other way around. But AT&T still has work to do if they want to make Mexico a profitable part of the wireless world. The percentage of Mexico’s population that has wireless service lags Latin America overall. Smartphone penetration in Mexico is about half that of the United States.

The chance of AT&T giving U.S. customers free or cheap access to wireless service in Mexico is zero. Of course, as a for profit entity, AT&T will find a way to make money off the move. Whether that means forcing customers to pay a hefty fee for access in Mexico or simply raising the bills for all AT&T customers in general, AT&T will make a nice amount of money on any U.S. customers traveling to Mexico in the future.

Recently, Mexico’s president, Enrique Pena Nieto, put in place reforms that were meant to bring more competition to the wireless industry in Mexico. Such rules include forbidding companies from controlling more than 50% of the market and relaxing rules on foreign ownership in Mexico.

The transaction is subject to review by Mexico’s telecom regulator IFT (Instituto Federal de Telecomunicaciones) and Mexico’s National Foreign Investments Commission.

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AT&T to Acquire Mexico Wireless Provider Iusacell

AT&T* (NYSE:T) has entered into an agreement with Grupo Salinas to acquire Mexican wireless company Iusacell for US$2.5 billion, inclusive of Iusacell debt. Under the terms of the agreement, AT&T will acquire all of Iusacell’s wireless properties, including licenses, network assets, retail stores and approximately 8.6 million subscribers. The acquisition will occur after Grupo Salinas, the current owner of 50 percent of Iusacell, closes its announced purchase of the other 50 percent of Iusacell that Grupo Salinas does not own today.

Iusacell offers wireless service under both the Iusacell and Unefón brand names with a network that today covers about 70 percent of Mexico’s approximately 120 million people. AT&T plans to expand Iusacell’s network to cover millions of additional consumers and businesses in Mexico.

“Our acquisition of Iusacell is a direct result of the reforms put in place by President Peña Nieto to encourage more competition and more investment in Mexico. Those reforms together with the country’s strong economic outlook, growing population and growing middle class make Mexico an attractive place to invest,” said Randall Stephenson, AT&T chairman and CEO. “Iusacell gives us a unique opportunity to create the first-ever North American Mobile Service area covering over 400 million consumers and businesses in Mexico and the United States. It won’t matter which country you’re in or which country you’re calling – it will all be one network, one customer experience.

Creating first-ever North American Mobile Service area to cover 400 million Mexico & U.S. consumers, businesses

“Mexico is still in the early stages of mobile Internet capabilities and adoption, but customer demand for it is growing rapidly,” Stephenson said. “This is an opportunity for us to provide Iusacell the financial resources, scale and expertise to accelerate the roll-out of world-class mobile Internet speeds and quality in Mexico, like we have in the United States.”

Mexico has the second largest economy and one of the highest per capita GDPs in Latin America. The country today enjoys a strong credit rating, relatively low inflation and low unemployment. And Mexico and the United States are connected geographically, economically and culturally.

Iusacell operates a 3G wireless network based on the global GSM/UMTS technology that AT&T uses in the United States. Iusacell owns between 20 and 25 MHz of 800 MHz spectrum, primarily in the southern half of the country, including Mexico City and Guadalajara, and an average of 39MHz of PCS spectrum nationwide. Iusacell’s Total Play business, including the network assets to support pay TV and wireline broadband services will be spun out to Grupo Salinas’ existing shareholders prior to AT&T closing its acquisition of Iusacell.

AT&T said Iusacell represents a natural geographic expansion of its wireless footprint into a country with a growing economy that is interdependent with the U.S. economy. Recent changes to government policies in Mexico have created a friendly climate for foreign investment. This transaction gives AT&T the assets necessary to create a first-ever North American Mobile Service area for U.S. customers calling or visiting Mexico, and Mexican customers calling or visiting the United States –whether they live near the border or thousands of miles away. The United States’ large and growing Hispanic population has close ties to Mexico and many current AT&T business customers have operations in Mexico. Mexico is the United States’ third largest trading partner.

The percent of Mexico’s population that has wireless service lags Latin America overall. Smartphone penetration in Mexico is about half that of the United States. AT&T expects that as the price to acquire a smartphone continues to decline and the availability of higher-speed mobile networks in Mexico increases, there will be higher smartphone adoption and increased mobile Internet usage. This coupled with Mexico’s growing economy, growing middle class, relatively young population, rising urbanization rates and higher disposable incomes are expected to drive growing demand for high-quality, high-speed mobile service in the years ahead.

Iusacell will continue to be headquartered in Mexico City following the transaction closing.

The companies believe that the synergy potential from the combination would include: customer additions from being able to create a one-of-a-kind North American Mobile Service area which will cover more than 400 million consumers and businesses in Mexico and the United States; economies of scale through combined purchasing opportunities; and the sharing of best practices. AT&T has a strong track record of successfully integrating companies it acquires and delivering on its financial commitments.

AT&T said Iusacell is a good long-term growth opportunity, with manageable near-term cash flow and capital expenditure requirements.

Both AT&T and Iusacell are leaders in corporate citizenship with a strong commitment to giving back to the communities in which they operate. Together, the combined company will work to mutually enhance their corporate responsibility initiatives for their employees and communities.

Iusacell’s and AT&T’s employees will benefit from global career development opportunities, as well as contribute their skills and experience to the combined organization’s continued growth.

The transaction is subject to review by Mexico’s telecom regulator IFT (Instituto Federal de Telecomunicaciones) and Mexico’s National Foreign Investments Commission. AT&T expects the transaction to close in the first quarter of 2015.

Separate from its acquisition of Iusacell, AT&T said its Project VIP network investment plan is ahead of schedule. AT&T has essentially completed the expansion of its 4G LTE network, which now covers more than 300 million people in the United States. It has completed the build-out of wired high-speed Internet service to 57 million U.S. customer locations. And the company has deployed fiber connections to 600,000 of its planned 1 million multi-tenant U.S. business locations.

AT&T’s VIP-related capital investment levels will peak in 2014, as the company has said previously. As a result, AT&T expects its 2015 capital expenditure budget for its existing businesses to be in the $18 billion range. This will bring the company’s capital spending as a percent of total revenues to the mid-teens level — consistent with its historical capital spending levels.

AT&T’s 2015 capex guidance does not affect the company’s commitment, when it closes its acquisition of DIRECTV, to begin enhancing and expanding its U.S. broadband network to 15 million customer locations, primarily in rural areas.

AT&T will provide guidance on the pro-forma financial impacts of its DIRECTV and Iusacell acquisitions when those deals close. Upon completion of both deals, AT&T’s revenues will be more diversified across services and geographies.

AT&T said it will continue to focus its capital investments on the most strategically important assets and opportunities, such as acquiring DIRECTV and Iusacell, while continuously reviewing and rationalizing its portfolio of less strategic assets.

AT&T will provide additional 2015 financial guidance in January when it announces its 4Q 2014 results.

French telecom operator Iliad is preparing to increase their bid for a “significantly larger” stake in T-Mobile, according to Bloomberg. In the past few weeks, rumors have leaked that Iliad is raising as much as $5 billion from investment firms in preparation of their new bid.

Previously, Iliad proposed buying a 56.6 percent stake in Deutsche Telekom’s U.S. unit at $33 for each T-Mobile share. Iliad is still offering $33 per T-Mobile share but wants to buy more shares from Deutsche Telekom. Iliad’s new offer will give Deutsche Telekom more total cash and a smaller remaining stake in T-Mobile.

Since 2011, Deutsche Telekom has tried selling T-Mobile due to their belief that they see the US market as “too small to compete” with Verizon and AT&T having such a stranglehold on the market. In August, Sprint dropped its bid to acquire T-Mobile after agreeing to pay $40 per share.

Seeing that Iliad has never operated in the U.S., Iliad’s purchase would likely not see anywhere near the regulatory pressure that either AT&T or Sprint had when trying to buy T-Mobile. Additionally, Iliad has previously self-imposed an October deadline to close a preliminary deal with Deutsche Telekom for the sale.

Iliad hopefully is prepared for what they have coming if their bid is accepted (and approved by regulators). T-Mobile has approximately 50 million subscribers while Iliad has just 8.6 million wireless subscribers along with 5.7 broadband subscribers in the French market. Thankfully as SlashGear notes, “it’s almost a sure thing T-Mobile would remain as-is.” That is good news for current and future T-Mobile customers.

Since AT&T failed to purchase T-Mobile, the wireless industry has been forced to deal with T-Mobile’s new vision. This vision includes getting one of the most stubborn industries to drop prices, shorten upgrade periods and kill off early termination fees. Basically, customers have benefited tremendously from the failed merger.

Recently, Sprint was unsuccessful in getting approval from regulators for a merger with T-Mobile. Sprint has since gotten a new CEO who has taken a page from T-Mobile in the fight for new customers. In the last few weeks, Sprint has unveiled their own iPhone deals, updated their device trade-in deals, launched a new leasing program and offered unlimited talk, text and data for $50 a month (with specific devices). Again, customers have benefited from a failed merger.

So, it came as a bit of a surprise to see C Spire Wireless CEO Hu Meena recently claim at the Competitive Carriers Association conference that Sprint abandoning their merger with T-Mobile had set back competition in the U.S. wireless market.

According to Meena, a Sprint/T-Mobile company would have allowed smaller carriers “to bring true competition to the marketplace.” Meena also claimed that wireless carriers had resorted to competing primarily on price and the “only innovation you see is how low our rates can go.”

I can see why wireless carriers would hate the idea of customers having reasonably priced choices for their wireless needs. Nevermind that even with these recent price cuts, wireless customers in the United States continue paying some of the highest prices in the world.

Additionally, when will wireless CEO’s learn that less competition does not equal anything good for consumers? Historically, consolidation with major players doesn’t work in the consumer’s favor. Not even close.

As PCWorld noted when Sprint and T-Mobile announced a merger:

Benefits get over-promised, problems get minimized. According to the companies involved, mergers improve service, lower prices, increase profits, and maintain competition all the while ………. In any case, you just shouldn’t believe what wireless companies say when they’re touting the benefits of a merger. – PCWorld

Dish Network has been itching to grab a wireless carrier for some time now. Dish was interested in Sprint last year and is now rumored to be looking to acquire T-Mobile. For years now, Dish has expressed interest in running their own LTE network.

Citing people with knowledge, Bloomberg is reporting that Dish Network chairman, Charlie Ergen, has contacted Deutsche Telekom to express interest in acquiring T-Mobile. There has not been any formal offer nor has any bank been hired to advise such a deal.

Deutsche Telekom recently rejected a bid from French telecom Iliad for T-Mobile in the amount of about $15 billion for a 56.6 percent stake in T-Mobile.

Deutsche Telekom, based in Bonn, views Dish as a better acquirer than Sprint because it wouldn’t rankle antitrust regulators by reducing the U.S. wireless market to three competitors from four, the person said. Dish also may have more firepower to bid than Iliad, which has been talking to private-equity firms about teaming up on an offer, the person said. – Bloomberg

Dish Network has also been rumored to be starting a new Internet TV service that aims to target the 18 to 34 year old demographic with a live TV channel package costing just $20 to $30 per month.

According to Bloomberg, Dish already holds an estimated $26 billion in airwaves. That number includes the large chunk of the FCC’s recent H Block auction which Dish paid $1.56 million for to become the fifth largest spectrum holder in the country.

In January, AT&T was rumored to be preparing a bid to acquire Vodafone but pulled itself out of the running.

The rumors have not stopped Vodafone from continuing their own expansion plans.

The company was this week linked to a potential deal to acquire one of Brazil’s three main mobile operators, in a bid to enter the lucrative Latin American market. Telecom Italia subsidiary TIM Brasil was reported to be Vodafone’s hot favorite. In April, Vodafone took full control of its Vodafone India business, when it acquired a 10.97 per cent stake in the unit from pharmaceutical company Piramal Enterprises. – FierceWireless

As Barrons notes, AT&T approved plans to buy back 300 million shares in March. A few months later, AT&T offered to buy Direct TV for $48.5 billion.

AT&T is expected to begin trying to push customers towards watching their favorite cable channels live on their smartphone or tablet without having to sign into a “TV Everywhere” service.

Last week, AT&T’s chief strategy officer, John Stankey, announced that they expect to begin deployment of LTE Multicast at some point in 2015. The move to LTE Multicast is expected to give AT&T the ability to deliver content to a large amount of subscribers without using substantial network resources.

The CSO explained that AT&T believes people are willing to pay for conveniently delivered TV content, but “the reality of the industry today and how content is licensed and sold doesn’t fit elegantly into that model.” – DigitalTrends

This is another move by AT&T which signals their intent to seal the $48.5 billion merger with DirecTV as that move would give AT&T the ability to offer a number of plans and bundles.

Even though the cable industry has tried to push “TV Everywhere” to existing customers, it has so far failed in popularity. One survey showed that 82% of consumers had no idea what TV Everywhere entailed while just just 4% of cable consumers know their login information which is mandatory to access TV Everywhere.

T-Mobile and Sprint have been supposedly close to a deal for some time now. But now, according to Reuters who spoke to people familiar with the matter, the merger will not occur before September.

In June, Japan’s SoftBank Corp, which controls Sprint, and T-Mobile owner Deutsche Telekom AG agreed to terms of a deal, which has Sprint paying around $40 per share for T-Mobile, which values T-Mobile at nearly $32 billion.

As Reuters notes, Sprint is very keen on making sure that all parts of the deal are flawlessly done, likely knowing that their company may be financially dead if the merger does not go through and they are forced to hand over spectrum and billions to T-Mobile.

Although SoftBank Chairman Masayoshi Son has argued that a merger would give the merged companies leverage to compete against the two dominant rivals, he continues to face an uphill climb in convincing US regulators who turned down a AT&T/T-Mobile merger because they believed that the country was better off with four national wireless carriers.

With rumors of Sprint and T-Mobile finalizing a deal that would merge the two companies, rumors are now being revealed which hint at Mexican billionaire Carlos Slim being interested in purchasing T-Mobile.

According to the Wall Street Journal, Slim recently received cash from his sale of shares of América Móvil and currently owns an interest TracFone, a US prepaid wireless service that is the country’s fifth largest carrier. TracFone currently leases capacity in large cellular networks operators like AT&T and Sprint.

Last week, America Movil announced that it was going to slash its market share in Mexico from 70% to 50% to avoid sanctions from the Mexican government.

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Money is not likely going to be a factor for Slim as he recently was named the richest person in the world with a fortune of $79.6 billion. As the Wall Street Journal mentions, Slim has been active in the U.S. with purchased stakes in Saks Inc., OfficeMax Inc. and the New York Times.

Unfortunately for Slim, if the talks between Sprint and T-Mobile are in fact close to being finished, it is unlikely that Slim could make a legitimate run at T-Mobile.

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With rumors of Sprint and T-Mobile finalizing a deal that would merge the two companies, rumors are now being revealed which hint at Mexican billionaire Carlos Slim being interested in purchasing T-Mobile.

According to the Wall Street Journal, Slim recently received cash from his sale of shares of América Móvil and currently owns an interest TracFone, a US prepaid wireless service that is the country’s fifth largest carrier. TracFone currently leases capacity in large cellular networks operators like AT&T and Sprint.

Last week, America Movil announced that it was going to slash its market share in Mexico from 70% to 50% to avoid sanctions from the Mexican government.

Money is not likely going to be a factor for Slim as he recently was named the richest person in the world with a fortune of $79.6 billion. As the Wall Street Journal mentions, Slim has been active in the U.S. with purchased stakes in Saks Inc., OfficeMax Inc. and the New York Times.

Unfortunately for Slim, if the talks between Sprint and T-Mobile are in fact close to being finished, it is unlikely that Slim could make a legitimate run at T-Mobile.

When T-Mobile announces their Q2 results at the end of the month, analysts expect T-Mobile to continue being the “fastest-growing wireless company in the U.S.”

According to TMONews, T-Mobile’s record Q1 results showed 2.4 million net adds between January 1st and the end of March. Therefore, it should not be a surprise to see T-Mobile not replicate that growth again. With 7% service-revenue growth, T-Mobile would continue to keep the title as the fastest-growing wireless company in the country.

Even with Sprint/T-Mobile merger details continuing to be leaked, it is becoming more difficult to argue that T-Mobile by itself is not quickly approaching AT&T and Verizon as a significant third competitor. Granted, I think T-Mobile is already at that point but some continue to believe that merging with Sprint is the only way for T-Mobile to compete long-term with AT&T and Verizon.

When T-Mobile announces their Q2 results at the end of the month, analysts expect T-Mobile to continue being the “fastest-growing wireless company in the U.S.”

According to TMONews, T-Mobile’s record Q1 results showed 2.4 million net adds between January 1st and the end of March. Therefore, it should not be a surprise to see T-Mobile not replicate that growth again. With 7% service-revenue growth, T-Mobile would continue to keep the title as the fastest-growing wireless company in the country.

Even with Sprint/T-Mobile merger details continuing to be leaked, it is becoming more difficult to argue that T-Mobile by itself is not quickly approaching AT&T and Verizon as a significant third competitor. Granted, I think T-Mobile is already at that point but some continue to believe that merging with Sprint is the only way for T-Mobile to compete long-term with AT&T and Verizon.

]]>http://www.androidauthority.com/t-mobile-expected-keep-title-fastest-growing-carrier-407374/feed/5Sprint, T-Mobile merger details being finalizedhttp://www.androidauthority.com/sprint-t-mobile-merger-details-finalized-404378/
http://www.androidauthority.com/sprint-t-mobile-merger-details-finalized-404378/#commentsMon, 14 Jul 2014 12:12:59 +0000http://www.androidauthority.com/?p=404378For awhile, we have been reporting about the potential merger between Sprint & T-Mobile being close, especially with Sprint having finalized financing for the deal.

Now, tm0news alerts us to a report from Asian publication, Nikkei, that claims that a deal is officially in place and just the final details need to be ironed out.

“SoftBank is purportedly seeking to buy more than 50% of T-Mobile US shares from German telecoms giant, Deutsche Telekom, which currently owns a majority 67% stake. Nikkei reports that SoftBank will use cash and stock swaps to find the $16 billion (1.7 trillion yen) required to buy that 50% stake.” – tmonews

As we have discussed previously, Sprint Chairman Masayoshi Son has continued promising that he would start a price war if allowed to merge with T-Mobile.

Unfortuately for Son, when regulators turned down the AT&T and T-Mobile merger, one of the explicit reasons for doing so was that the country was better off with four national wireless carriers. Several weeks ago, telecom analyst Craig Moffett wrote that the T-Mobile Sprint merger had less than a 10% chance of getting regulatory approval.

Rumors have been circulating for awhile now that if allowed to merge, Sprint intends to retain T-Mobile CEO John Legere. Although that would be a great move for the new company, would it be enough to counter the fact that the country would be losing a significant national competitor?